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Wednesay, October 1, 2008
Welcome to www.samuipropertyonline.com,
the online version of Samui Property, an independent monthly property &
real estate newspaper published by Siam Map Co. Ltd., Koh Samui,
Thailand.
Samui Property offers impartial, objective
news articles, stories, legal advice & information, zone maps, photos,
classified adverts and features about real estate, property, villas,
developments, homes, house and land for sale and other real estate
related items on Koh Samui.
Please come back every month for fresh
news and information on the Koh Samui Property & Real Estate Market.
Riding The Storm
Samui's property market has survived all adversities and the future remains bright.
Imagine a situation when Samui has no rain for ten weeks. Every night you go to sleep expecting tomorrow to be another fine day, and every morning you’re greeted by sunshine through the curtains. The good weather becomes something you take for granted and your confidence becomes stronger.
It’s great for many reasons: the sun makes you feel good; business is generally improved; and everyone seems happy and content with their lives. Even though logic tells you that it has to end soon, you carry on leaving the car windows down, putting the washing out overnight, and even leaving expensive electrical equipment unprotected outside.
Then, sometimes with no warning at all, the rain comes. With the rain there’s a combination of other factors: thunder, lightning and high winds. Before you even know what’s happening, you’re in the middle of a big storm. Fortunately, on Samui, most storms like this are very short lived and pass in a couple of days. But, occasionally, like in the rainy seasons of 2005 and 2007, they can linger.
When a storm lasts this long, people’s confidence is affected and they start to expect rain every day. Business on a tourist island like Samui is obviously adversely affected, and in general the whole mood is one bordering on depression. However, once the storm has passed, within hours life starts to return to normal; water levels start to recede; debris is cleaned up and repairs are started. In fact, within days you would never know the storm had even visited unless you looked very closely.
This is a perfect metaphor to describe what Samui’s real-estate market has been through. For years it had been in a sunny patch. People were queuing up to buy property on this exceptional island. Developers and agents sprang up everywhere and successfully sold houses without any real issues arising. With sales increasing, and the market attracting international attention, the property boom began. And it grew rapidly beyond everyone’s expectations. House and land prices rose to extraordinary levels and confidence led some to take risks, with no harm done.
And then the first storm came. A land scam hit the press, claiming fraudulent land papers and other offences; there was a tightening on the law around foreigners using nominee companies to purchase land; and more restrictive visa controls were introduced.
At first, people said it would pass. But the storm continued to rage. A military coup saw the government overthrown and a new military-led interim government put into power. During this time, not only was the law being more strictly adhered to, in terms of foreign ownership, but proposals were also made to negatively amend the law surrounding the issue. Setting up a Thai company to facilitate buying freehold land was no longer the easy option for a foreigner; nominee shareholders and preferential voting rights were all being closely scrutinised. Fortunately, leasehold agreements were pushed to the forefront as a genuinely legal alternative. But again this is not without issue and needs to be updated to reflect the current situation and provide some further guarantees for foreign owners.
Throughout all of the upheaval people continued to buy properties on Samui, albeit in fewer numbers than before.
A new government was elected. Fears and concerns about law changes eased and foreign investment was openly encouraged. The sun came out and shone again on Samui. Huge international interest in property; world renowned hotel groups arriving almost weekly; an expanded and improved airport opened to cope with rising tourist numbers and additional international and domestic flights; and the addition of Thai Airways flying daily to Samui are all things that helped erase the memories of the storm.
Sales at the start of this year were very promising; government incentives and tax relief were introduced to further support the real-estate industry and the forecast was looking very good indeed.
Lessons are generally learnt from storms. Measures can be taken to limit any future problems from occurring. You may not be able to control the weather, but things can be done to help prevent flooding; buildings can be strengthened to withstand the winds; and improved insurance policies can be taken out to cover the worst case scenarios.
The same applies to real-estate. Things can be done to protect the industry from some similar problems in the future. However, like the weather, some problems are unpredictable. The current global financial situation has once again resulted in the clouds gathering over the Samui property market. Borrowing money in many countries is becoming harder; people have less cash available for investments; high fuel and food costs affect people’s daily living and inhibit travel plans. Tourist numbers and property sales will undoubtedly be affected.
And now the political problems are once again escalating and adding to the economic problems; with mass demonstrations against the government causing headline news around the world. Pictures of demonstrators closing airports and affecting tourist destinations in Thailand are not a positive promotional factor for those building, selling or buying real-estate. Tourist cancellations and the instability and uncertainty surrounding the politics of the nation all compound the problem.
Fortunately, few people are actually put off the island because of a storm. You never forget how good life can be here and the natural beauty that surrounds you. Good things generally arise after the storm has gone: water stocks are up; the tourists continue to come; the experience leads to better education; and people are more prepared. Most importantly, Samui survives and gets stronger.
It’s the same for the real-estate market; there will be some damage when the economic and political storms pass. But they will clear, and people will be left with more experience. Lessons will again be learnt and few, if any, potential investors will be permanently put off from buying property.
And, just like after a storm, the reparation process will begin immediately. Within a short time the market will be back to where it was and strive forward.
Samui has a long-term future as a thriving real-estate destination. The island has too many attractions to deter people from investing. And as long as the tourists come, then so will property investors. General buyer confidence may have been knocked a little once again, but many investors will see that current circumstances present an ideal opportunity to enter the market whilst prices have levelled, or even dipped in some areas. Buyers who can continue with their purchase plans are in a strong position. There are a lot of properties to choose from and prices are relatively stable.
All industries encounter occasional storms but this rarely signifies the end. In fact, it’s more likely to produce, a stronger and more stable future market. There’s no doubt that Samui is one of the premier worldwide tourist destinations and an international property hot-spot. In the face of all the above-mentioned adversities, it’s continued to be a target for property investors and, therefore, once the global economic problems have inevitably eased, and the political situation has settled, there’s nowhere with as bright and sunny a forecast as here on Samui.
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